payout ratio investment & finance definition
The
percentage of earnings that are paid in dividends. To calculate the ratio,
dividend per share is divided by earnings per share.
See payout ratio in Wall Street Words
The ratio from which the percentage of net income a firm pays to its stockholders in dividends is calculated. Companies paying most of their earnings in dividends have little left for investment to provide for future earnings growth. Stock of firms with high payout ratios appeals primarily to investors seeking high current income and limited capital growth. Also called
dividend payout ratio. See also
dividend coverage,
retained earnings.
Learn more about payout ratio
